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No Interest On Late Deposit of GST TDS upto 30.06.2020

In view of distress in the country due to COVID-19 pandemic, the Ministry of Law & Justice, recently on 31 March 2020, issued the Taxation & Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 in order to provide extension of various time limits.

This ordinance vide its Section 8 seeks to insert Section 168A in CGST Act, 2017 which provides power to the government to make necessary changes in law to extend the time limit in respect of actions which cannot be completed or complied with due to unforeseen circumstances. Further, this power to issue notification has been granted with retrospective effect not earlier than date of commencement of this Act, i.e. 01 July 2017.

Furnishing of GST TDS return

In pursuance of powers given under Section 168A ibid., the CBIC issued Notifications No. 30/2020 to 36/2020 - Central Tax on 03 April 2020 providing various extensions/waivers. Subsequent to issuance of these notifications, there were discussions going on regarding extension of filing of TDS return, i.e. Form GSTR-7.

Notification No. 35/2020 - Central Tax dated 03 April 2020 (effective retrospectively from 20 March 2020) provides that any time limit for completion of any compliance under GST law which falls between 20 March 2020 to 29 March 2020 and could not be made due to the spread of pandemic COVID-19 in the country, then such time limit shall be extended upto 30 June 2020. The notification although makes certain exclusions and contains a list of sections to which such notification shall not apply.

Requirement for filing TDS return has been given under Section 39(3) of CGST Act, 2017 which is not excluded from the purview of Notification no. 35/2020, and thus, time limit of furnishing return of TDS, i.e. Form GSTR-7 for the month of March, April and May 2020 has been extended till 30 June 2020. The same is also clarified by CBIC videCircular No. 136/06/2020-GST dated 03 April 2020(S. No. 9 of table given in Point No. 3).

Payment of TDS so deducted to Government exchequer

Further, another confusion was the implication of interest liability since Notification no. 35/2020 - Central Tax dated 03 April 2020 specifically excluded from its scope provisions of Section 50 of CGST Act, 2017. However, it must be noted that Notification No. 35/2020 does not exclude Section 51 of CGST Act, 2017 from its scope which contains provisions related to tax deducted at source and provides for payment of TDS so deducted to Government exchequer. Ergo, since time limit for payment of TDS so deducted has also been extended till 30 June 2020 vide Section 51, application of provisions of Section 50, i.e. interest will not come into picture. This view has also been clarified by CBIC later vide Circular No.137/07/2020-GST dated 13 April 2020 (S. No. 5 of table contained in Point No. 2).

Conclusion

Therefore, both the due date for furnishing of TDS return for the months March to May 2020 as well as payment of the TDS so deduced to Government exchequer has been extended to 30 June 2020 and no interest implication shall arise for payment made till that date.

Subject: Clarification in respect of certain challenges faced by the registered persons in implementation of provisions of GST Laws-reg.

Circular No.136/06/2020-GST, dated 03.04.2020 had been issued to clarify doubts regarding relief measures taken by the Government for facilitating taxpayers in meeting the compliance
requirements under various provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) on account of the measures taken to prevent the spread of Novel Corona Virus (COVID-19).
It has been brought to the notice of the Board that certain challenges are being faced by taxpayers in adhering to the compliance requirements under various other provisions of the CGST Act which also need to be clarified.

2. The issues raised have been examined and in order to ensure uniformity in the implementation of the provisions of the law across the field formations, the Board, in exercise
of its powers conferred under section 168(1) of the CGST Act hereby clarifies as under:

S.No.

Issue

Clarification

1.

An advance is received by a supplier for a Service contract which subsequently gotcancelled. The supplier has issued the invoice before supply of service and paid the GST thereon. Whether he can claim refund of tax paid or ishe required to adjust

In case GST is paid by the supplier on advances received for a future event which got cancelled subsequently and forwhich invoice is issued before supply of service, the supplieris required to issue a “credit note” in terms of section 34 of the CGST Act. He shall declare the details of such credit notes in the return for the month during which such credit note has been issued. The tax liability shall be adjusted in the return subject to conditions of section 34 of the CGST Act. There is no need to file a separate refund claim.However, in cases where there is no output liability against which a credit note can be adjusted, registered persons may

his tax liability in his returns ?

proceed to file a claim under “Excess payment of tax, if any” through FORM GST RFD-01.

2.

An advance is received by a supplier for a Service contract which got cancelled subsequently. The supplier has issued receipt voucher and paid the GST on such advance received. Whether he can claim refund of tax paid on advance or he is required to adjust his tax liability in hisreturns?

In case GST is paid by the supplier on advances received for an event which got cancelled subsequently and for which no invoice has been issued in terms of section 31 (2) of the CGST Act, he is required to issue a “refund voucher” in terms of section 31 (3) (e) of the CGST Act read with rule 51 of the CGST Rules.The taxpayer can apply for refund of GST paid on such advances by filing FORM GST RFD-01 under the category “Refund of excess payment of tax”.

3.

Goods supplied by a supplier under cover of a tax invoice are returned by the recipient. Whether he can claim refund of tax paid or is he required to adjust his tax liability in his returns ?

In such a case where the goods supplied by a supplier are returned by the recipient and where tax invoice had been issued, the supplier is required to issue a “credit note” in terms of section 34 of the CGST Act. He shall declare the details of such credit notes in the return for the month during which such credit note has been issued. The tax liability shall be adjusted in the return subject to conditions of section 34 of the CGST Act. There is no need to file a separate refund claim in such a case.However, in cases where there is no output liability against which a credit note can be adjusted, registered persons may proceed to file a claim under “Excess payment of tax, if any” through FORM GST RFD-01.

4.

Letter of Undertaking (LUT) furnished for the purposes of zero- rated supplies as per provisions of section16 of the Integrated Goods and Services Tax Act, 2017 read with rule 96A of the CGST Rules has expired on 31.03.2020. Whether a registered person can still make a zero-rated supply on such LUT and claim refund accordingly ordoes he have to make such supplies on payment of IGST and claim refund of such

IGST ?

Notification No. 37/2017-Central Tax, dated 04.10.2017, requires LUT to be furnished for a financial year. However, in terms of notification No. 35/2020 Central Tax dated 03.04.2020, where the requirement under the GST Law for furnishing of any report, document, return, statement or such other record falls during between the period from 20.03.2020 to 29.06.2020, has been extended till 30.06.2020.Therefore, in terms of Notification No. 35/2020-Central Tax, time limit for filing of LUT for the year 2020-21 shall stand extended to 30.06.2020 and the taxpayer can continue to make the supply without payment of tax under LUT provided that the FORM GST RFD-11 for 2020-21 is furnished on or before 30.06.2020. Taxpayers may quote the reference no of the LUT for the year 2019-20 in the relevantdocuments.

5.

While making the payment to recipient, amount equivalent to one per cent was deducted as per the provisions of section51 of Central Goods and Services Tax Act, 2017 i. e. Tax Deducted at Source (TDS). Whether the date of deposit of such payment has also been extended videnotification N. 35/2020-Central Tax dated 03.04.2020?

As per notification No. 35/2020-Central Tax dated 03.04.2020, where the timeline for any compliance required as per sub-section (3) of section 39 and section 51 of the Central Goods and Services Tax Act, 2017 falls during the period from 20.03.2020 to 29.06.2020, the same has been extended till 30.06.2020. Accordingly, the due date for furnishing of return in FORM GSTR-7 along with deposit of tax deducted for the said period has also been extended till 30.06.2020 and no interest under section 50 shall be leviable if tax deducted is deposited by 30.06.2020.

6.

As per section 54 (1), a person is required to make an application before expiry of two years from the relevant date. If in a particular case, date for making an application for refund expires on 31.03.2020, can such person make an application for refund before29.07.2020?

As per notification No. 35/2020-Central Tax dated 03.04.2020, where the timeline for any compliance required as per sub-section (1) of section 54 of the Central Goods and Services Tax Act, 2017 falls during the period from 20.03.2020 to 29.06.2020, the same has been extended till 30.06.2020. Accordingly, the due date for filing an application for refund falling during the said period has also been extended till 30.06.2020.